Channel 5 swaps &pound;1m of ads for stake in online insurer

Channel 5 has agreed to swap advertising worth £1m for a stake in an unknown internet company. In the first such deal by a UK terrestrial television operation, Channel 5 will gain an 8 per cent stake in Rapidinsure, Britain's first insurance company operating solely on the internet.

Channel 5 has agreed to swap advertising worth £1m for a stake in an unknown internet company. In the first such deal by a UK terrestrial television operation, Channel 5 will gain an 8 per cent stake in Rapidinsure, Britain's first insurance company operating solely on the internet.

In return the insurer will advertise its brand every day for a year in 30-second slots before and after the prime-time evening weather forecast, as well as taking slots between programmes and sponsoring shows on subjects such as home improvements.

James Burgon, head of new business at Channel 5, said: "We are trying to develop innovative ways of using our commodity, which is our airtime, and have been looking at dot.coms because of their potential growth. We based this on the very successful American model where the networks NBC and CBS have taken equity for airtime."

The move follows a deal on Monday by the AIM-listed digital Money Channel, which exchanged 360 slots of 30 seconds each for £20,000 of shares in the software provider Updata.

Leading personalities in the media have been quick to cash in on dot.com shares. TV presenter Jonathan Ross took a 1 per cent stake in the online toy retailer Toyzone in return for doing the voice-over for its advert last year.

Antiques expert Hugh Scully was tempted away from the BBC by a five-year £3m deal that included shares and 10 per cent of profits in European online auctioneer QXL.

Channel 5, which has 6 per cent of the national viewing share, is owned by United News and Media and the European media company CLT-UFA, which each have a 35 per cent stake in the company. Pearson owns 29 per cent.

United shares were among the worst performers in the FTSE 100 yesterday, closing down 35p at 874.5p, but analysts said this was not connected with the Channel 5 announcement. Pearson shares closed up 54p at 2,183p.